How easily can I roll one Roth IRA into another?

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jomama341
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How easily can I roll one Roth IRA into another?

Post by jomama341 » Wed Sep 12, 2018 10:21 pm

I have two Roth IRA's, one with Schwab and one with Vanguard. I only have the Schwab Roth because I'm currently taking advantage of the mega backdoor Roth that my employer's 401k plan allows for and since Schwab administers my 401k, it's been easier to rollover the after-tax money from one Schwab account to another instead of rolling it over to my Vanguard Roth.

That said, I've accumulated a good chunk of change in my Schwab Roth and I was thinking of trying to move it over to my Vanguard Roth since I prefer Vanguard's index funds and my ultimate goal is to have everything Vanguard some day.

My question: can I easily rollover the funds from my Schwab Roth into my Vanguard Roth without incurring any sort of tax liability? I'm also wondering if my Schwab Roth would remain open (albeit with a 0 balance) were I to roll the funds over to Vanguard?

Thanks for any advice!

mhalley
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Re: How easily can I roll one Roth IRA into another?

Post by mhalley » Thu Sep 13, 2018 1:38 am

No tax liability on moving from Roth to Roth. I imagine the account would remain open with a zero balance, I have had zero balance in my schwab trad Ira since rolling it to a Roth last year, and a couple traditional IRAs at vanguard with zero balances for 3 years.

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Eagle33
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Re: How easily can I roll one Roth IRA into another?

Post by Eagle33 » Thu Sep 13, 2018 1:41 am

jomama341 wrote:
Wed Sep 12, 2018 10:21 pm
My question: can I easily rollover the funds from my Schwab Roth into my Vanguard Roth without incurring any sort of tax liability? I'm also wondering if my Schwab Roth would remain open (albeit with a 0 balance) were I to roll the funds over to Vanguard?
Simple 3-step process
https://investor.vanguard.com/account-t ... sfer-money

You should be able to TRANSFER a portion of Schwab Roth even if Schwab requires some minimum amount left in account to keep open for future mega backdoors.
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.

RickBoglehead
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Re: How easily can I roll one Roth IRA into another?

Post by RickBoglehead » Thu Sep 13, 2018 4:26 am

If you do a transfer to Vanguard of the entire amount, Schwab will close the account and charge a closing fee.

If you leave a balance, make sure it is high enough to avoid an annual fee.

jomama341
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Re: How easily can I roll one Roth IRA into another?

Post by jomama341 » Thu Sep 13, 2018 7:51 am

Thanks all! Very helpful information.

kaneohe
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Re: How easily can I roll one Roth IRA into another?

Post by kaneohe » Thu Sep 13, 2018 8:48 am

RickBoglehead wrote:
Thu Sep 13, 2018 4:26 am
If you do a transfer to Vanguard of the entire amount, Schwab will close the account and charge a closing fee.

If you leave a balance, make sure it is high enough to avoid an annual fee.
Ask Schwab to be sure .........there may also be a transfer fee to move assets out.....whether it is full or partial and whether they do the transfer or VG does. Years ago I was trying to transfer a partial out of a TIRA , not a Roth.
They said they would have a charge regardless of who did the transfer so I ended doing an indirect rollover to avoid the charge.......today you have to be careful to follow the "once every 365 day" rollover rule or else............
We have accounts w/ balances < $1 w/o any fees but ask for your own situation.

jomama341
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Re: How easily can I roll one Roth IRA into another?

Post by jomama341 » Thu Sep 13, 2018 8:50 am

Thanks. I chatted with one of their reps and they said I wouldn't get hit with a fee if the balance was $0, but they may close it due to inactivity after an unspecified amount of time. I may leave a small balance in there to avoid it.

I didn't ask about transfer fees, though. That's a good point. Will ask them now.

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Earl Lemongrab
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Re: How easily can I roll one Roth IRA into another?

Post by Earl Lemongrab » Thu Sep 13, 2018 1:44 pm

The latest information I have is that Schwab charges $25 for a partial and $50 for a complete transfer. No separate IRA closing fee.

https://www.brokerage-review.com/discou ... -fees.aspx

You could avoid that with a 60-day rollover, but you only get one per rolling 12-month period and it's more trouble and time out of the market.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

jomama341
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Re: How easily can I roll one Roth IRA into another?

Post by jomama341 » Thu Sep 13, 2018 1:47 pm

Thanks. With the 60 day rollover option, does that mean my money would be out of the market for a full 60 days or does that just mean I have 60 days to complete the rollover?

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Earl Lemongrab
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Re: How easily can I roll one Roth IRA into another?

Post by Earl Lemongrab » Thu Sep 13, 2018 1:59 pm

jomama341 wrote:
Thu Sep 13, 2018 1:47 pm
Thanks. With the 60 day rollover option, does that mean my money would be out of the market for a full 60 days or does that just mean I have 60 days to complete the rollover?
The latter. You could just withdraw the cash to a linked account and use an equivalent amount to fund the rollover. It probably wouldn't be more than a few days total.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

jomama341
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Re: How easily can I roll one Roth IRA into another?

Post by jomama341 » Thu Sep 13, 2018 2:06 pm

Earl Lemongrab wrote:
Thu Sep 13, 2018 1:59 pm
You could just withdraw the cash to a linked account and use an equivalent amount to fund the rollover. It probably wouldn't be more than a few days total.
Sorry, not sure I understand this point. Could you elaborate?

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Earl Lemongrab
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Re: How easily can I roll one Roth IRA into another?

Post by Earl Lemongrab » Thu Sep 13, 2018 2:22 pm

jomama341 wrote:
Thu Sep 13, 2018 2:06 pm
Earl Lemongrab wrote:
Thu Sep 13, 2018 1:59 pm
You could just withdraw the cash to a linked account and use an equivalent amount to fund the rollover. It probably wouldn't be more than a few days total.
Sorry, not sure I understand this point. Could you elaborate?
Not very much. You can link a bank account with the brokerage. You can push the cash to that account. You can then use a linked account to fund the new IRA (assuming Vanguard allows funding rollovers this way). It doesn't have to the same physical dollars.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

jomama341
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Re: How easily can I roll one Roth IRA into another?

Post by jomama341 » Thu Sep 13, 2018 2:30 pm

So, as long as I do this within 60 days, I won't get hit with an early withdrawal penalty right?

kaneohe
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Re: How easily can I roll one Roth IRA into another?

Post by kaneohe » Thu Sep 13, 2018 4:23 pm

Yes, but be sure you understand you can only do this once every 365 days......once includes both your TIRA and Roths....so if you do a Roth rollover you can't do either a Roth or TIRA indirect rollover for 365 days.

jomama341
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Re: How easily can I roll one Roth IRA into another?

Post by jomama341 » Thu Sep 13, 2018 4:29 pm

Is that 365 limit specific to Schwab or is it a federal regulation of some sort that applies to all my accounts? I do a TIRA to Roth rollover once a year in January, but entirely within Vanguard. Don't want to prevent myself from being able to do that.

kaneohe
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Re: How easily can I roll one Roth IRA into another?

Post by kaneohe » Thu Sep 13, 2018 5:15 pm

jomama341 wrote:
Thu Sep 13, 2018 4:29 pm
Is that 365 limit specific to Schwab or is it a federal regulation of some sort that applies to all my accounts? I do a TIRA to Roth rollover once a year in January, but entirely within Vanguard. Don't want to prevent myself from being able to do that.
It's not Schwab specific......it is a federal regulation. Words are funny things.....I would call your TIRA to Roth thing a conversion and there are not any limits on that AFAIK........the rollover rule here pertains to IRAs so
TIRA to TIRA and Roth to Roth. https://www.irs.gov/retirement-plans/pl ... tributions

Note also: it is not 1 rollover per calendar year. Although it is commonly referred to a the one year or 12 mo.rule, I prefer to think of it as the 365 day rule .

Note that the referenced link also has some discussion about rules before the 1 yr rollover rules started so don't get confused by that . Also note that direct transfers are allowed w/o restrictions but there may be broker fees involved as you know.

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